Nepal: Rebar offers hit nearly 7-month high on costlier imports, power curbs

Steel mills in Nepal have raised rebar offers this week by NPR 1,500/t ($12/t). Current prices of rebar (12mm) are at around NPR 95,000-96,000/t ($728-736/t) exw, excluding VAT. Offers have hit nearly a seven-month high as these levels were last seen in June 2022, according to data maintained with SteelMint.

Factors driving rebar offers –

• Import prices up in recent bookings from India: Imported steel prices from India inched up in recent deals. Current offers of IF-route billets from India stand at $605-610/t CPT Nepal and BF-route billet offers stand at $590/t ex-mill (equivalent to $610/t CPT Nepal). A deal for 7,000 t of Indian-origin BF-route billets was concluded last week at $600/t CPT Nepal.

Indian-origin wire rod (BF-route) deal for around 1,300 t was concluded at $660-665/t ex-mill this week. Prices have risen by $10-15/t w-o-w.

Indian mills have limited allocations for HRC exports to Nepal for end Febuary-early March shipments. An unconfirmed deal of Indian HRC for two rakes was heard concluded at $700/t CPT Nepal. Prices rose by $50/t w-o-w.

In a deal reported last week, 10,000 t of C-DRI (80% FeM) was sold by a eastern Indian player at around $435/t CPT Raxual border.

• Lower steel capacity utilisation on power cuts: As power generation from the run-of-river-based powerhouses reduced due to the drop in water levels of the rivers during the dry season, the Nepal Electricity Authority imposed power cuts for industrial use during the morning and evening hours. Market participants reported lower steel capacity utilisation this week, which may continue for at least for a month.
• Positive demand outlook: Market participants expect that there are lesser chances of a drop in steel prices in Q1CY23, considering the fact that it is traditionally a season of strong demand and power curbs in Nepal may keep output restricted.

With steel demand of roughly 2.5 mnt per annum, Nepal has been focusing a lot on the construction sector. The country’s construction sector is said to contribute around 10-11% to its GDP. In addition, Nepal imports nearly 1-1.5 mnt of semi-finished steel and 1 mnt of finished steel annually (both flats and longs), with India being the largest supplier with a share of 95% in total imports.

To gain a deeper insight into the changing dynamics of Nepal’s steel industry, book your seat at the 2nd Nepal Trade Summit to be organised by SteelMint Events on 1-2 March, 2023 in Soaltee Crowne Plaza – Kathmandu.